Nussbaum Becomes Focus Of Whitewater Testimony

A Justice Department lawyer today testified that prosecutors were surprised and frustrated when the White House counsel, Bernard W. Nussbaum, refused to allow them to inspect the papers of Vincent W. Foster Jr., breaking an agreement they believed they had reached.

The Senate Whitewater committee also heard today from a lawyer who represented the family of Mr. Foster, the deputy White House counsel, describing the discovery of the scraps of a note detailing Mr. Foster's disillusionment with Washington in terms that were sharply at odds with Mr. Nussbaum's account.

The renewed scrutiny of Mr. Nussbaum, who resigned last year, came as the panel completed its second week of hearings. Mr. Nussbaum, who returned to his law practice in New York last year after stepping down as counsel, is expected to be questioned by the panel next month. But even some Democrats today wavered in their defense of him.

Senator Paul S. Sarbanes of Maryland, the ranking Democrat on the committee, suggested in questioning a Justice Department official that while Mr. Nussbaum may not have violated any laws or regulations, his control over the investigation gave the appearance of being improper.

Mr. Foster had worked on a variety of sensitive political and personal matters for the President and Hillary Rodham Clinton, his former law partner in Little Rock, Ark. Files found in his office after he died showed that he had worked on the Clintons' trust and tax returns, as well as the Whitewater land venture.

The committee is trying to determine whether the White House or the Clintons sought to place improper obstacles in the way of the investigation into Mr. Foster's death. They are also examining whether any files were removed from his office.

A Justice Department lawyer, Roger C. Adams, testified today that while investigators reached a preliminary decision that Mr. Foster's death was probably a suicide, the investigators were obliged to try to find a motive for his death that might include blackmail or some other crime. It was not until six days after his death that the White House said it had discovered a note, ripped in 27 pieces, in which Mr. Foster said he was not meant for Washington.

Senate Republicans elicited testimony from Mr. Adams about the frustrations of investigators who said they were blocked by Mr. Nussbaum from even a cursory examination of any of the documents in Mr. Foster's office two days after his death on July 20, 1993. Mr. Adams, said Mr. Nussbaum had reneged on an arrangement reached on July 21, 1993, that would have permitted the Justice Department lawyers to peek at the top pages of Mr. Foster's files for clues about why he had died.

"We argued with Mr. Nussbaum," said Mr. Adams, who was one of two Justice Department lawyers in Mr. Foster's office during a review on July 22. "We said this is not what you'd agreed to. You made a mistake." He said the lawyers called the Deputy Attorney General, Philip B. Heymann. Records show Mr. Heymann then called Mr. Nussbaum to complain.

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Mr. Adams said the investigators were concerned that Mr. Nussbaum was simply using them to make it appear that an independent investigation was being conducted.

He said that the other Justice Department lawyer present on July 22, David Margolis, was so angered about the limitations imposed on the investigators that he said to Mr. Nussbaum: "If this is the way the search is going, I might as well go back to my office and you can mail me the results of the investigation."

Mr. Heymann's handwritten notes, and those of one of his aides, show that he complained to Mr. Nussbaum that he was threatening to ruin the investigation. Ultimately, however, the Justice Department yielded to Mr. Nussbaum. The prosecutors permitted Mr. Nussbaum to go through the papers in Mr. Foster's office, generally describing them while the other lawyers watched from a distance.

Mr. Nussbaum has told Congressional investigators that he did not believe there was any agreement about the handling of the papers. Instead, Mr. Nussbaum has said, he denied access to the Justice Department lawyers because the files were protected by attorney-client privilege and executive privilege.

The investigators became particularly concerned about being embarrassed when the White House said it had found Mr. Foster's note on July 26, four days after the office review, when a White House lawyer was packing the briefcase to be sent to Mr. Foster's lawyers. Clinton aides say the shredded note was discovered by an associate counsel, Stephen Neuwirth, in Mr. Foster's briefcase.

But today Michael L. Spafford, a lawyer for the Foster family, said he had overheard a conversation in which Mr. Nussbaum was told of the pieces of paper on July 22, shortly after the investigators left Mr. Foster's office. Mr. Spafford was present for the review of the office. Mr. Spafford said Clifford Sloan, an associate White House counsel, noticed the paper scraps in the briefcase and pointed them out to Mr. Nussbaum.

Officials involved in the investigation said neither Mr. Sloan nor Mr. Nussbaum could recall the incident.

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A version of this article appears in print on July 28, 1995, on Page A00017 of the National edition with the headline: Nussbaum Becomes Focus Of Whitewater Testimony. Order Reprints|Today's Paper|Subscribe